Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Q1 2020 Earnings Presentation
28 slides from Smartfinancial's earnings presentation, Apr 28, 2020
Slide 1: First Quarter 2020 Earnings Release
First Quarter 2020 Earnings Release April 29, 2020
Slide 2: Legal Disclaimer
Legal Disclaimer Forward-Looking Statements This presentation may contain statements that are based on management’s current estimates or expectations of future events or future results, and that may be deemed to constitute forward- looking statements as defined under the Private Securities Litigatio
Slide 3: Overview of SmartFinancial
Overview of SmartFinancial . SmartFinancial, Inc. (Nasdaq: SMBK) is a $2.9 billion asset bank holding company headquartered Branch Footprint in Knoxville, Tennessee . Operates one subsidiary bank, SmartBank, which was founded Nashville in January 2007 Knoxville . Located primarily in attractive, hig
Slide 4: Culture
Culture We are building a culture where Associates thrive and are empowered to be leaders. The core values that we have established as a company help us operate in unison and have become a critical part of our culture. Our Associates are key to SmartBank’s success. Core Values Act with Integrity Del
Slide 5: Approach and Actions Taken in Response to COVID-19
Approach and Actions Taken in Response to COVID-19 COVID-19 Actions • Established Senior Executive meetings to discuss potential scenarios • Increased associate communications regarding precautions and preparedness activities • Enacted cancellation of non-essential business travel for all associates
Slide 6: Supporting Associates, Clients and Communities
Supporting Associates, Clients and Communities Associates Clients Communities • Implemented work-at-home • Branch offices remained open • Formed a Community strategy for those associates • Provided relief to commercial and Engagement Roundtable made up whose jobs can be performed consumer clients wi
Slide 7: First Quarter Financial Highlights
First Quarter Financial Highlights
Slide 8: Continuing Increase in Operating Pre-Tax Pre-Provision Earnings
Continuing Increase in Operating Pre-Tax Pre-Provision Earnings $10,000 GAAP) - $7,500 $5,000 Provision Provision (Non Earnings ($000) - $2,500 Tax Pre Tax - $0 Operating Operating Pre 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 Operating PTPP Earnings, Less Accretion Accretion ($ in thousands) 1Q1
Slide 9: Performance Trends
Performance Trends ROAA (%) ROATCE (%) . Net Operating Earnings (Non-GAAP) of $4.3 million for the quarter 1.56 % 16.8 % 1.12 % 1.02 % 1.08 % 11.6 % . ROAA of 0.43% for the quarter and 0.98 % 1.01 % 10.6 % 11.1 % 0.96 % 10.8 % 10.3 % 10.5 % Net Operating ROAA (Non-GAAP) of 0.84 % 9.3 % 0.67 % 0.67%
Slide 10: Balance Sheet Trends
Balance Sheet Trends Total Assets ($mm) Loans ($mm) $3,000 $2,874 $2,200 $2,139 $2,600 $2,000 $2,354 $2,391 $2,390 $2,449 $1,897 $1,838 $1,833 $1,865 $2,200 $1,800 $1,800 $1,600 $1,400 $1,400 $1,000 $1,200 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 Total Deposits ($mm) Book Value Per Share $2
Slide 11: Net Interest Income
Net Interest Income . Net Interest Margin (FTE) increased 6 bps quarter-to-quarter to 3.90% . Compared quarter-to-quarter, Earning Asset Yields have decreased 9 basis points; the Average Cost of Interest-Bearing Liabilities have decreased 19 basis points . Excluding the effect of purchase accounting
Slide 12: Operating (Non-GAAP) Noninterest Income
Operating (Non-GAAP) Noninterest Income . Added insurance commission income stream from acquisition of Progressive Financial Group, Inc. . Investment services income increased from additional production . Mortgage banking income increased over 56% from the prior quarter . Consistent increases in ser
Slide 13: Operating (Non-GAAP) Noninterest Expense
Operating (Non-GAAP) Noninterest Expense . Operating Efficiency Ratio (Non-GAAP) remained stable quarter-to-quarter at 65% . Salary and benefits remained stable . Continued investment in infrastructure ($ in thousands) Operating (Non-GAAP) Noninterest Expense $20,000 $15,000 Other Amortization of In
Slide 14: Attractive Deposit Mix
Attractive Deposit Mix Deposit Composition (3/31/20) Historical Deposit Composition ($mm) $2,500 $2,342 Noninterest $2,047 Time Demand $1,994 $2,012 $1,998 $2,000 Deposits 19% $736 31% $635 $673 $647 $680 Interest- bearing $1,500 Money Demand Market and 19% $730 Savings $623 31% $1,000 $698 $648 $63
Slide 15: Overview of Loan Portfolio
Overview of Loan Portfolio Loan Composition (3/31/20) Historical Loan Composition ($mm) $2,500 Other <1% Consumer RE $2,139 22% $2,000 CRE, Non $1,865 $1,897 $1,838 $1,833 $483 Owner C&I Occupied 18% $417 25% $409 $402 $402 $1,500 $536 CRE, $476 Owner C&D $473 $464 $468 Occupied 12% 22% $1,000 $473
Slide 16: Segments Impacted by COVID-19
Segments Impacted by COVID-19 ($ in thousands) Total Avg. Loan Commitments O / S Balance Size % of Portfolio Industry ($) ($) ($) (%) Restaurants/Bars $ 91,328 $ 86,990 $ 518 4.1 % Hospitality / Lodging 185,053 143,831 2,438 6.7 Attraction / Amusement 40,846 37,886 1,994 1.8 Retail CRE 82,171 78,599
Slide 17: COVID-19 Modified Loans
COVID-19 Modified Loans ($ in thousands) COVID-19 Modified Loans April 2020 Modified Loans Avg. Loan % of Modified Size Portfolio Industry ($) ($) (%) Restaurants $ 70,781 $ 885 3.0 % Hospitality / Lodging 120,761 4,164 5.1 Attraction / Amusement 4,163 833 0.2 Retail CRE 20,002 1,250 0.8 1-4 Vacatio
Slide 18: Paycheck Protection Program
Paycheck Protection Program Funded Dollars State ($ in thousands) Tennessee $ 151,905 Alabama 51,795 Florida 19,314 Georgia 8,370 Other 7,962 Total $ 239,346 PPP Loan Stratification Table as of 4/24/20 Funded Application Dollars Average SBA Fee Count ($ in thousands) ($ in thousands) 1% 7 $ 22,020 $
Slide 19: Asset Quality
Asset Quality . Superior asset quality, with Nonperforming Assets at 0.31% of Total Assets compared to the Nonperforming Assets ($ in thousands) Southeast Peer Median (1) of 0.66% $12,000 1.00% 0.66% . Remaining fair value discounts on acquired $8,000 0.70% loans are 1.3x the current Allowance For L
Slide 20: Reserve Reconciliation
Reserve Reconciliation ($ in thousands) 1Q19 2Q19 3Q19 4Q19 1Q20 Allowance for Loan Losses (GAAP) - Originated $ 8,704 $ 8,979 $ 9,674 $ 9,969 $ 12,412 Allowance for Loan Losses (GAAP) - Acquired -- 118 118 274 1,019 Loan Discounts 19,954 15,871 16,784 15,348 17,237 Total Reserves $ 28,658 $ 24,968
Slide 21: Current Capital Position
Current Capital Position TCE / TA (%) Leverage Ratio (%) 16.0% 16.0% 12.0% 9.9% 12.0% 9.6% 9.9% 10.3% 10.3% 9.3% 9.0% 9.3% 9.9% 10.0% 8.0% 8.0% 4.0% 4.0% 0.0% 0.0% 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 CET1 Ratio (%) Total Risk-Based Capital Ratio (%) 16.0% 16.0% 13.7% 14.0% 14.0% 13.0%
Slide 22: Strong Liquidity Position
Strong Liquidity Position Cash and Cash Equivalents ($mm) Bank Funding Sources ($mm) $350.0 $309.1 Liquidity Amount Available $280.0 Sources ($mm) $199.5 $210.0 $170.9 $184.0 Unpledged Investment Securities $ 105.3 $140.0 $133.0 $70.0 Overnight Fed Funds 69.6 $0.0 1Q19 2Q19 3Q19 4Q19 1Q20 FRB Discou
Slide 23: Earnings Profile – First Quarter 2020
Earnings Profile – First Quarter 2020 . Net Interest Income increased over ($ in thousands, expect per share data) 1Q20 4Q19 1Q19 7% year-over-year (“YoY”) due to higher average earning asset Total Interest Income $27,998 $27,028 $26,943 Total Interest Expense 5,427 5,924 5,946 balances Net Interest
Slide 24: Appendix
Alb, SmartFinancial, Inc. Appendix
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in thousands) 1Q20 4Q19 3Q19 2Q19 1Q19 Net interest income - ex purchase acct. adj. Net interest income (GAAP) $ 22,571 $ 21,104 $ 21,140 $ 20,802 $ 20,997 Taxable equivalent adjustment 117 116 110 116 115 Net interest income TEY 22,688 21,220 21,250 20,918 21,112 Purchas
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in thousands, except per share data) 1Q20 4Q19 3Q19 2Q19 1Q19 Operating Earnings Net income (GAAP) $ 2,732 $ 6,733 $ 5,963 $ 9,121 $ 4,731 Noninterest income: Securities (gains) losses - - (1) (33) - ADECA termination proceeds - (720) - - - Merger termination fee - - - (6
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in thousands, except per share data) 1Q20 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 Operating Pre-Tax Pre-Provison Income Net interest income (GAAP) $ 22,571 $ 21,104 $ 21,140 $ 20,802 $ 20,997 $ 21,447 $ 18,860 $ 19,538 $ 16,811 Operating noninterest income (Non-GAAP) 2,81
Slide 28: Investor Contacts
Investor Contacts Billy Carroll Miller Welborn President & CEO Chairman (865) 868-0613 (423) 385-3067 Billy.Carroll@SmartBank.com Miller.Welborn@SmartBank.com SmartFinancial, Inc. 5401 Kingston Pike, Suite 600 Knoxville, TN 37919 28